Information and Consulting

Thursday, March 24, 2011

Nood-ling (nōōd’lĭng) n. 1. Fishing for catfish using only bare hands, practiced primarily by crazy people who cannot afford proper fishing gear. 2. The intentional annoyance by bloggers who are skeptical of the news as it’s reported, as in “Noodling bureaucrats is more fun than fishing bare hand for catfish and a lot more surprising.”

The Shrinking Home Syndrome
The fact that new home sizes are shrinking is all over the news (at least for the few new homes that are sold). There seems to be an attempt to rationalize the decisions by the marketplace to demand “smaller” homes. I beg to differ. I think it’s a result of commodity prices increasing the dollars per square foot price of the home. The increase in steel costs, copper costs, shipping costs, etc. all drive up the construction price. The marketplace determines the price range of new homes– the size of the home is a direct result. I don’t believe the market wants a smaller home; the market wants a home they can afford. There is a difference.

The Home Buyer Wants a Green Home
The first amenity in any new home is “Price,” all the other buyer’s needs fall well behind this paramount demand. It has been my experience that the new home buyer will not pay more for a “green home;” they expect these amenities, such as solar, double/triple pane glass, and toxic free furnishings, as standard. They won’t pay the extra $30,000 for solar electricity, if the house (all other things being equal) across the street is $30,000 less without it, they won’t pay thousands more for wool carpeting over synthetic, they won’t pay for sustainable bamboo over traditional oak flooring. They expect these amenities to be in the home. It’s my take that it is more the builders not wanting to be left out of the garish marketing push to label everything they do as “green,” than the “buyer’s” need, (and don’t forget the requirements by cities to also feel good about these “sustainable improvements” by requiring these expensive extras in approved projects).

Neanderthal Art
My Neanderthal urban artistic thinking hopes that San Francisco will come to its senses and throw out the proposed design for the new signature sculpture for the Transbay Transit Center (see video) . It’s my fear that it may be confused for a debris dump and may accidentally be hauled away as landfill for a tech building in Mission Bay (see below). Without a doubt, it is one of the dumbest sculpture ideas ever perpetrated on the citizenry of a city in the whole history of art (hyperbole intented). It’s so out of context with the design it’s tragic. And while I’m at it, why does San Francisco feel it’s necessary to validate such drivel? San Francisco has some wonderful and less than wonderful art on its streets, some kitschy, some serious, and some just stupid. Why add this to the mix?

Transbay Transit Center Sculpture

Sculpture Around San Francisco

California Redevelopment
Again California’s local governments have come out brighter than the mothership. Jerry Brown has demanded that the 425 Redevelopment agencies be shut down, their income returned to better things, like the state. I’ve gone into the good and bad of the agencies in past blogs; sure there are some that stepped over the line, but there are many that have saved the urban hearts of communities and ignited growth and better times. The issues of state spending and balanced budgets are not going to be solved by literally stealing from Peter to pay Paul (that’s not a Peter, Paul and Mary analogy – it’s much bigger than that). State government has grown so large with so many overlapping agencies and requirements that it was a forgone conclusion years ago that this would happen. How many environmental agencies deal with approvals, how many prison boards and commissions, how many state agencies deal with welfare and healthcare. We can rationalize all we want, but at least there is local control over these redevelopment agencies that responds to the immediate needs and desires of the area (see Transbay Terminal above for a good example).

Thursday, March 17, 2011

I have, over the last nine months, challenged the fundamentals of the electric car on one specific issue, its viability in a world of inexpensive gasoline. And now there is one more issue to deal with, the unquestionable silliness of Washington to force feed the car (esp. the American version) down the throats of the American consumer. Patrick Michaels points out, in a Forbes article about the Chevy Volt, its debut is nothing more than a sham and if you and I were to proceed the way GM has, I suggest that we would be sharing a hall with Bernie Madoff.

And yes, gasoline is still inexpensive. Germans pay about $5.60 for a gallon (last month), but a good chunk of it above $4.00 is taxes. They seem to survive.

I have no sympathy for a product that does not meet the needs and expectations of the marketplace. Every year thousands of products, inventions, toys and all sorts of things are designed, manufactured, marketed and then offered to the public. Most fail.

The alleys of the marketing world are littered with great ideas, the Edsel, New Coke, Microsoft’s Zune, Microsoft WebTV, Apple’s Newton, the DeLoren, Sony Betamax, the USFL, Charlie Sheen, and the list goes on.

The Volt, and other such pretentious products, will have to meet the measure of the consumer, and no matter how it’s presented. If it doesn’t, it will and deserves to, fail. Pumping the marketplace with subsidies, tax credits, tax refunds, and free chargers will not prop up a disaster. Sure its price is high, $41,000 sticker (just try and find one at that price), which is $17,500 over the price of a Ford Focus-SFE(40 mpg), that will get you essentially 175,000 free miles for the difference, even with $4.00 gas. And the Volt STILL uses gasoline to push you down the highway. Maybe it should be renamed the Chevy Gas.

My problem is with the use of public funds to support, what is essentially, a United States government owned company (U.S., not the non-capitalized us). There are so many other uses to waste money on, why the rabid focus on just this?

I firmly believe there is an all-electric American car in the urban future, but it has to compete with all the other competitive transportation products, both electric and hybrid, out there and soon coming down your street. The Tesla looks interesting, the Fisker Karma is dramatic, the Nissan Leaf is tailpipeless, and soon there will be others. But even these will get the tax savings – at least for a while. Remember the hybrid’s use of HOV lanes in California, what gov gives – gov takes.

But the future is a little dusty right now. Will there be the power generation needed to help fill the batteries of these little beasties? What is the future of nuclear power? How will these personal transportation devices compete for juice with the giant sucking sound of high-speed rail in the future? I don’t know, and neither does anyone else. I’m just getting a little tired of paying for someone else’s toys.

Friday, March 11, 2011

An all-out press has been made in Florida to rationalize the costs for the high-speed link between Tampa and Orlando. The cost of the study was $1.3 million in federal rail dollars (Is this a new form of American currency – federal rail dollars?). This is now the new version of state and federal investment (state’s plan-fed’s pay) and like most private development it’s always good to use OPM (Other People’s Money). But it’s someone’s and you only have to look out the window to see whose OPM it is.

Can high-speed rail be profitable? The greater question is should it be profitable? The interstate highway system, started in the mid to late 1950s and dramatically changed America. Without a doubt it’s the greatest transformer of economies and cities since the late 1800s and the growth of railroads throughout the country. Fortunes were made from both enterprises, one fundamentally private (with lots of federal bonds), the other almost exclusively public through the use of huge federal bonds paid for (70% +/-) by user fees that are primarily gasoline taxes.

The rational, and I do accept it, is that the highway system provided the base infrastructure that permitted the most significant growth and change to America, the suburbs. The cities could not accommodate or even contain the growth of the last fifty years. The interstate highway system facilitated and supported this expansion. We again became a country of small towns and villages. That growth is no longer a trend, it is woven into the fabric of America, as evidenced in the current census numbers being released. The cities are not growing; it’s in their surrounding communities and towns where land, homes, and business opportunities abound.

The ongoing justification for the high-speed rail system is to facilitate the growth of America into this next century. Jobs, as transitory as they are, seem to be the base rational to spend hundreds of billions of dollars to make it quicker to go from inner-city to inner-city. The other arguments are questionable: they will be profitable, they are an alternative to the car, they will spur growth in the cities, and they are “sustainable.”

We have a very good rail system throughout the United States; Warren Buffet thought so, and bought a railroad. I don’t hear the rail companies clamoring for a faster system of moving shipping containers filled with Chinese goods across the country (my guess is that they secretly hope for a separate rail system so the damn passenger trains will get off their rails). As an old Illinois Central executive said a half a century ago, “Freight makes money, people make trouble.”

High speed rail, a point-to-point system, will do little to serve the small towns and villages of America. The best they will do is annoy the residents as they whistle through at one hundred and fifty miles an hour. The interstate highway created jobs by being the great enabler in community planning. Every off-ramp became the local “train station” of the 19th century. Communities evolved and grew; the interstate system became the twentieth century’s version of civilization’s river landings and ocean ports.

If more jobs need to be created, build on and support the existing passenger rail system, freight not-withstanding. Push for electrification, revive the intercity trolleys of eighty years ago, expand and aid BART, MARTA, and other regional Metro systems, focus on regions not continental pipe-dreams.

And remember that there is not one high-speed rail car and train builder in the United States; they will come from France, Germany, South Korea, Japan and China. We have forgotten how to build bridges (the new SF Bay Bridge is from China), railroads, and even toys. And just because Europe and the world have high speed systems doesn’t mean we have to; they still have a few kings and political systems that are a lot different than ours, change anyone?

Friday, March 4, 2011

Believe it or not, there is a debate centered on whether the American future depends on the city. The two leading cultural and social debaters, Richard Florida and Joel Kotkin take very different views of where we are heading. Florida, in his recent book The Great Reset, believes in the dense megaregion to drive the development of new industries and technologies and the creation of a whole new way of life. Joel believes in demographics and that people still have a choice, and they currently are voting with their feet and walking away from the denser urban centers toward “opportunity” regions.

The politicians and bureaucrats have to believe that the future is in our dense urban regions, and are focused on the major cities (I would too if that’s where the most votes live). They believe in the return to the city and like Richard Florida, opine that this is where the future will evolve. Maybe, maybe not.

Unlike most other countries, Americans, Canadians, and some European countries do not have to rely on the core urban city to move forward. But in other regions, it is the city where the jobs, ports and commerce centers, and many of the universities are. What affects the poorer countrysides in India, China, Vietnam, and Brazil more than anything is that their cities are where jobs and modern infrastructures exist. Say what you will about the futures of these countries, but it's their severe lack of stable and supportive infrastructures (poor roads, unsafe water, intermittent electricity, along with subsistence living conditions), that will doom these countries for years and years. They must depend on the urban region to exist in the Twenty-first Century.

Do we have to depend on the city for the American future and growth? We are now seeing how incredibility complex these urban centers are; aged infrastructures, poor quality housing, excessive taxation, almost criminal school systems, and above all incredibly bad management, this does not portend a great future for the city. For these and many other reasons, people vote with their feet.

Cities, while amazing physical structures, are the most fragile social ecosystems humans have created. For almost 7,000 years people have used cities as centers of commerce. The oldest seem to have been founded in the Levant, the region around Lebanon, Syria, and Israel; a crossroads in the trade routes of north-south and east-west commerce. Our American city building efforts pale in comparison to other great cities that have grown to maturity, like Athens and Rome, only to fail, rebuild, fail, then rebuild again. Others cities have maintained an increasing world importance for two thousand years, like London. Others are being created out of nothing but desire and intense amounts of capital, like Dubai. To foolishly believe that a city is permanent, we only have to look at Berlin in 1946, or Lisbon in 1755 when it was essentially wiped off the map of world by an earthquake, is to see how easily they can be destroyed. Great plagues gutted Medieval European cities; these plagues were the neutron bombs of their time, a city without people is only architecture. One could even argue that the greater and more intense the population, the greater its risk to disease and infection.

My belief is that current Western culture allows for and in fact demands a more flexible human network. Cities will exist and will grow, but the citizen does not have to physically live in and participate in the city. Economic costs are too high for all but the wealthy to live well in the city; all other residents in the urban core require the support, through taxes and investment of this smaller but wealthier group. It is like Paris where the taxes of the rest of France support this incredibly costly city. If these fortunate and wealthier citizens aren’t supported and encouraged to participate, they will leave. The city will become poorer and more dangerous, both financially and culturally, look at Detroit.

Florida can believe in the future of the megaregions, the creative class, a less auto-centric culture, and high speed rail as the ultimate savior; but he will have to tax the suburbanite and the small town citizen to make them work. As we see now, they will rebel. All the research and “fact” collecting won’t divine the future of a wealthy society that has the ability to make cultural and economic choices outside of the demands of the “State.” People in a free society will make decisions in their own self-interest. If this changes, no matter what government carrots are hanging out there, we may be in trouble.

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About Me

Greg was born in 1949 in Traverse City, Michigan. Raised near Chicago he moved to California in 1971. The son of a journalist and entrepreneur, Greg has never forgotten his roots; his non-fiction work has focused on the Midwest region. Californian by choice, Mr. Randall makes his home in Walnut Creek, California with his wife, constant companion, and business partner. His preferred fiction genre is mystery/thrillers and historically based novels.